California's Billionaire Tax Looks Dead, but Democrats Want a Federal One

California's billionaire tax is on life support. With votes still being counted, 56% of the state's voters have said no to Proposition 40, which would have slapped a one-time 5% levy on the net worth of Californians worth more than $1 billion. The measure needs a majority to pass, so election experts say it's likely done.

Two companion measures built to kneecap it are cruising. Proposition 41 and Proposition 42 — which restrict how revenue can be used and block any state taxation of personal assets — are both pulling majority support, according to CNBC. If either finishes ahead of the billionaire tax, the tax dies.

The Service Employees International Union-United Healthcare Workers West, the healthcare union that bankrolled the proposal, all but waved the white flag Tuesday night. The union says it will run it back in 2028 unless the legislature moves to make billionaires pay their fair share.

Not every tax-the-rich pitch flopped. Washington State voters backed a new millionaire tax — a 9.9% rate on household income above $1 million a year. In Colorado, a plan to swap the 4.4% flat tax for a graduated income tax topping out at 8.4% on income over $1 million is too close to call.

Now Democrats are set to control both the House and the Senate, and tax experts expect a pile of new proposals aimed at lifting taxes on high earners while cutting them for lower- and middle-income taxpayers. Howard Gleckman of the Tax Policy Center said it's clear Democrats will try to lower taxes for middle-income households and raise them on certain businesses and high-income households — but added it's much too soon to know how.

Ideas already on the table could get a second look. Sen. Chris Van Hollen, D-Md., has floated a graduated surtax starting at 5% for earners making $1 million to $2 million and climbing to 12% above $5 million, pushing the top rate to 49% from 37%, plus a capital gains top rate hike from 23.8% to 35.8%. Sen. Cory Booker, D-N.J., wants a 43% top rate and a standard deduction of $37,500 for single filers and $75,000 for joint filers. Rep. Ro Khanna, D-Calif., and Sen. Bernie Sanders, I-Vt., are pushing a Make Billionaires Pay Their Fair Share Act — a 5% annual tax on net worth above $1 billion, unlike California's one-shot version. President Trump would likely veto any of it, but the Tax Foundation says proposals made in 2027 will shape the direction of policy in the future.